It is raising the bulk of the new monies from investors via a placing and open offer that could bring in as much as £8mln. At 5p each, the shares are being sold at 17% discount Monday’s closing price.
A further £4mln will provided by finance house Norgine Ventures, which will subscribe to bonds with warrants attached.
Chief executive Jamal Rushdy called the funding round “strategically important”.
Not only does it strengthen the balance sheet, it “provides the resources to accelerate our core biomaterials and tissue business”, he said.
“Furthermore, the capital will provide the company with the opportunity to fund the development of a range of exciting new products for use in the rapidly emerging field of regenerative medicine,” Rushdy added.
It is looking to develop and launch new, higher value “finished device products”, which will supplement the revenues from base business – the supply of bovine collagen materials.
As the company points out in its statement, while the revenue stream from the current operation is stable and long-term, the sales cycle is often “long and complex”.
So, Collagen Solutions is moving up the value chain with products such ChondroMimetic, an implant used to treat cartilage and underlying bone defects.
It also plans to go ahead with bone graft and wound treatment collagen devices.
“The company's expertise, experience, and infrastructure in collagen and tissue engineering can be leveraged to move up the value chain to produce its own finished devices, which can address current customer needs to improve their own product portfolios with immediately available and differentiated products,” Collagen’s release earlier Tuesday said.
“The company expects to invest in developing those higher value finished device products as part of a longer term collaborative relationship with its customers.”
--- Updates for CEO Video ---